SCCE Official Site - Presenter and Contact Informationyear scheme in Indonesia in same scheme as Alstom. Ordered to pay an $88 million criminal fine. Fine based on the following: (1)

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© Thomas R. Fox / tomfoxlaw.com PC All Right Reserved

2014 Anti-Corruption Enforcement Mid-Year Review

Presentation to SCCE

2014 National Compliance and Ethics Institute

© Thomas R. Fox / tomfoxlaw.com PC

Presenter and Contact Information

Thomas R. Fox

ph: 832-744-0264

[email protected]

Follow me at www.twitter.com/tfoxlaw

Follow my blog at http://tfoxlaw.wordpress.com/

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Practices Under the FCPA and Bribery Act/Lessons Learned From the Beautiful

Game


The FCPA Year in Review/Anti-Bribery Leadership


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Enforcement Trends by the Numbers


FCPA Enforcement

© Thomas R. Fox / tomfoxlaw.com PC Source: Gibson Dunn and Crutcher Mid-Year FCPA Report

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Enforcement Actions


Corporate-Alcoa

Alcoa-$384MM fine, including $175MM in profit disgorgement. 5th Largest fine of all-time. No. 1 in disgorgement amount

One Guilty in UK, one prosecution dropped


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Corporate-HP

$108MM total fine

Multi-country bribery schemes. Complete breakdown in internal controls

Multiple enforcement tools Criminal Plea in Russia

DPA in Poland

NPA in Mexico


Corporate-Marubeni

Marubeni pleaded guilty in March to participating in the seven-year scheme in Indonesia in same scheme as Alstom. Ordered to pay an $88 million criminal fine.

Fine based on the following: (1) failure to voluntarily disclose its conduct;

(2) refusal to cooperate with the investigation when given the opportunity to do so;

(3) lack of an effective compliance and ethics program when the offense occurred;

(4) failure to properly remediate; and

(5) prior history of criminal conduct.


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Individuals-PetroTiger Accusations of bribing an official at Ecopetrol SA,

Colombia’s state-controlled oil company, and defrauding PetroTiger by taking kickbacks.

Joseph Sigelman, the former co-CEO of PetroTiger Ltd., was charged with conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering offenses, will fight charges.

Knut Hammarskjold, co-CEO and the company’s former General Counsel (GC), Gregory Weisman, have already pled guilty to the charges.



Enforcement Actions-Individuals

Firtash and Associates Dmitry Firtash, Ukrainian national, arrested in Vienna.

The following were indicated with Firtash and charged with conspiracy to violate the FCPA, and who are still at large: Andras Knopp, a Hungarian businessman;

Suren Gevorgyan a Ukrainian national;

Gajendra Lal, an Indian national and permanent resident of the US;

Periyasamy Sunderalingam, a Sri Lankan

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Enforcement Actions-Individuals Direct Access Partners-Benito Chinea, former

CEO of DAP and Joseph Demeneses, a former managing director charged in federal court in New York for bribery involving Venezuela’s state bank

BizJet-Bernd Kowalewski, former CEO of company arrested in Amsterdam in March and pled guilty in July

Frederic Cilins-BSRG representative pled guilty to obstruction of justice. Two year sentence


Mark Jackson and James Ruehlen

Initial allegations included the anti-bribery provisions, internal controls and false records provisions relating to the FCPA

Case whittled down to false records only

Defendants agreed not to violate the FCPA going forward

SEC Prosecution-Noble Exec

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Esquenazi


First Court to Rule on SOEs

Court held that state owned enterprises can be instrumentalities under FCPA

Rejected defense arguments that (1) “that only an actual part of the government

would qualify as an instrumentality” or

(2) the FCPA should be construed to encompass only foreign entities performing ‘core’ governmental functions similar to departments or agencies.


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Court Creates Two-Prong Test

Recognizing that the least is not dispositive, the Court articled a Two-Prong Test: Control Test

Function Test


Control Test(1) The foreign government’s formal designation of the entity;

(2) Whether the government has an interest in the entity;

(3) The government’s ability to hire and fire the entity’s principals;

(4) The extent to which the entity’s profits, if any, go directly into the governmental fisc;

(5) The extent to which the government funds the entity if it fails to break even; and

(6) The length of time these indicia have existed.


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Function Test

(1) Does the entity have a monopoly over the function it exists to carry out;

(2) Does the foreign government subsidize the costs associated with the entity providing the services;

(3) Does the entity provide services to the public at large in the foreign Country; and

(4) Does the foreign government generally perceive the entity to be performing a governmental function?


Opinion Release 14-01

Foreign Government Official Buy-out clause from prior contract relationship

Changed contract formula to allow positive gain

Government official would not pass on business awards to relator

Short time frame-just over 6 months to resolution


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GSK Continues


The Saga Continues

Humphrey and Wu-found guilty in one-day trial

Sex tape of GSK head in China

Responses to Whistleblower

GSK investigating corruption in Poland, Syria and other countries

SFO formal investigation


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More to Come

Reilly charged with orchestrating $90MM in illegal sales

46 other GSK employees caught up in prosecution

Current and former employees sue for bonuses


Business Solutions to the FCPA


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Scott Killingworth and P2P

“Embodied in contract clauses and codes of conduct for business partners, these obligations often go beyond mere compliance with law and address the methods by which compliance is assured. They create new compliance obligations and enforcement mechanisms and touch upon the structure, design, priorities, functions and administration of corporate ethics and compliance programs. And these obligations are contagious: increasingly accountable not only for their own compliance but also that of their supply chains, companies must seek corresponding contractual assurances upstream. Compliance is becoming privatized, and privatization is going viral.”


Robert Gates


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Effect of FCPA“In a private meeting, the king [King Abdullah of Saudi Arabia] committed to a $60 billion weapons deal including the purchase of eighty-four F-15’s, the upgrade of seventy-15s already in the Saudi air force, twenty-four Apache helicopters, and seventy-two Blackhawk helicopters. His ministers and generals had pressed him hard to buy either Russian or French fighters, but I think he suspected that was because some of the money would end up in their pockets. He wanted all the Saudi money to go toward military equipment, not into Swiss bank accounts, and thus he wanted to buy from us. The king explicitly told me saw the huge purchase as an investment in a long-term strategic relationship with the United States, linking our militaries for decades to come.”


Robert Gates

When US security interests,

When US foreign policy,

When US economic interests,

When US military interests,

When existing US law is already in place,

Good business practices

All Converge—It is good policy

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Questions?

Documents

SCCE Official Site - Presenter and Contact Informationyear scheme in Indonesia in same scheme as Alstom. Ordered to pay an $88 million criminal fine. Fine based on the following: (1)